Home / Knowledge / News / Textiles / Will domestic market absorb excessive production capacity?
Will domestic market absorb excessive production capacity?
03
Nov '08
Seriously impacted by economic crisis and a resultant slow growth in exports, Chinese textile enterprises are turning their attention towards the domestic market. But experts are skeptical as, when a large number of textile enterprises shift their attention to domestic markets, the textile industry in China will face at least 30 percent of excess production capacity, not counting swamping of foreign brands and products.

In the first nine months of the current year, China's textile and apparel exports reached US $132.6 billion, a year-on-year increase of 6.72 percent, an awful drop in comparison to nearly 20 percent growth achieved in the same period of 2007. In fact, whatever growth in value that is reflected is due to change in exchange rates.

If effect of depreciation of dollar is removed, China's textile and apparel has actually fallen by 2.7 percent in the first nine months of 2008 compared to the same period of last year.

Although China has a huge consumer base of more than 1.3 billion people, the influx of a large number of enterprises eyeing the local market is bound to lead to fierce competition and will be hard for China's textile industry to avoid price wars in the next few years.

Currently, China's ratio of textile exports and imports is 1:1. Preliminary estimates show that current size of the domestic market is about Yuan 600-700 billion while exports are almost Yuan 700-800 billion. When domestic and some foreign manufacturers sell their products in China's domestic market, value of deliveries in local markets is estimated to reach Yuan 1.050 trillion.

It can be certainly said that the domestic market will not be able to absorb the vast amount of products over and above its capacity leading to a supply and demand conflict and ultimately price wars.

If the above comes true, 30 percent of the existing production capacity will be eliminated, however over a period of three to five years or even longer. After that period, China's textile industry will rely mainly on domestic demand for volumes while foreign trade will be totally dependent on quality rather than volumes.

Fibre2fashion News Desk - China


Must ReadView All

Uzbekistan, UAE explore partnership in trade, investment

Textiles | On 20th Mar 2019

Uzbekistan, UAE explore partnership in trade, investment

Uzbekistan and the United Arab Emirates (UAE) have agreed to increase ...

Sri Lanka's textile exports up 5.7% to $5.317 bn in 2018

Textiles | On 20th Mar 2019

Sri Lanka's textile exports up 5.7% to $5.317 bn in 2018

Sri Lanka’s earnings from textiles and garments exports increased by...

Pic: SDG Knowledge Hub

Apparel/Garments | On 20th Mar 2019

Garment supply chain traceability tool being developed

The UN Economic Commission for Europe (UNECE), the European...

Interviews View All

Top executives, Textile industry

Top executives
Textile industry

Sri Lanka has a good sustainable track record and strong stories to back it

Riddhika Shah, SS Homme

Riddhika Shah
SS Homme

'Worsted wool is the ideal fabric for menswear'

Sanjay Yagnik, Maa Tex Speciality

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Abhishek Pachauri,

Abhishek Pachauri

Reckon Industries adapts latest systems for manufacturing from designing...

Harssh Chheda,

Harssh Chheda

Mumbai-based Corporate Collars provides bespoke tailoring services for...

Rajat Jaipuria,

Rajat Jaipuria

Activewear brand Soul Space promotes organic cotton farming and...

Pierre Wiertz, EDANA

Pierre Wiertz
EDANA

EDANA, the international association serving the nonwovens and related...

Mohammad Hassan, Biax Fiberfilm

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Kevin Nelson, TissueGen

Kevin Nelson
TissueGen

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Cigdem Akin, Cigdem Akin

Cigdem Akin
Cigdem Akin

She has carved a niche for herself as the national brand of Turkey. Her...

Varsha Wadhwa, VW

Varsha Wadhwa
VW

Coming from a family that ran a business of jute and linen mills since...

Amiben Shroff, Shrujan

Amiben Shroff
Shrujan

From its modest beginning in the late 1960s, Shrujan has grown into a...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


March 2019

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Advanced Search